The Australian Bureau of Statistics (ABS) has revealed that while Australian retail turnover fell in January, liquor sales were up 0.3%.
According to ABS Retail Trade figures, Australian retail was down 0.3% overall in January, following a fall of 0.7% in December 2019.
“Bushfires in January negatively impacted a range of retail businesses across a variety of industries” said Ben James, Director of Quarterly Economy Wide Surveys.
“Retailers reported a range of impacts that reduced customer numbers, including interruptions to trading hours and tourism.”
There were falls for household goods retailing (-1.1%), department stores (-2.2%), clothing, footwear and personal accessory retailing (-1.1%), cafes, restaurants and takeaway food services (-0.3%), and other retailing (-0.1%).
These falls were partially offset by a rise in food retailing (0.4%).
In current prices, the ABS trend estimate for Food retailing rose 0.2% in January 2020. The seasonally adjusted estimate rose 0.4%. By industry subgroup, the trend estimate rose for supermarkets and grocery stores (0.1%), and liquor retailing (0.3%), and fell for other specialised food retailing (-0.1%).
The ABS seasonally adjusted estimate rose for supermarkets and grocery stores (0.4%), and liquor retailing (0.9%), and fell for other specialised food retailing (-1.1%).
Macquarie University Associate Professor of Marketing Jana Bowden told ABC News fear and boredom played a role in how people spent money in a crisis.
“The news has been particularly devastating — we have gone from fires to floods and now to the virus,” she said.
“On the one hand you have these tight purse strings, consumer spending is down … and then you have the secondary effect of people not wanting to go outside.
But she said consumers had a tipping point where they tended to be so overloaded with bad news they needed comfort from something distracting.
In seasonally adjusted terms, there were retail falls in Western Australia (-1.1%), Victoria (-0.2%), the Australian Capital Territory (-2.3%), New South Wales (-0.1%), Queensland (-0.1%), Tasmania (-0.5%), and the Northern Territory (-0.5%). South Australia (0.1%) rose in seasonally adjusted terms in January 2020.
The trend estimate for Australian retail turnover rose 0.1% in January 2020, following a 0.1% rise in December 2019. Compared to January 2019, the trend estimate rose 2.3%.
Online retail turnover contributed 6.3% to total retail turnover in original terms in January 2020. In January 2019, online retail turnover contributed 5.6% to total retail.
Coronavirus crisis impact to come
However, the drinks industry has since been hard hit by the coronavirus, with the hospitality sector reeling from the lockdown and suppliers struggling with both distribution and sales.
And analysts are predicting it’s going to get worse.
“A global recession is likely if COVID-19 becomes a pandemic, and the odds of that are uncomfortably high and rising with infections surging in Italy and Korea,” said Mark Zandi, chief economist at Moody’s Analytics.
Diageo announced last month that it estimates the negative impact in fiscal 2020 on the group’s organic net sales and organic operating profit to be in a range of £225million to £325million and £140million to £200million, respectively.
Treasury Wine Estates has already downgraded its full-year profit forecasts twice. Pernod Ricard admitted there are challenges ahead for its business in China.
During an earnings call on Thursday, AB InBev executives outlined the negative impact the virus is having on its larger beer business in China. CEO Carlos Brito also revealed the brewer has established a “crisis room” in China.
“The outbreak has led to a significant decline in demand in China in both on-premise and in-home channels,” the company said.
The outbreak led to lost revenue of $285 million in the first two months of 2020, the brewer reported.
And Brown-Forman worked coronavirus impact into its guidance lat week. It announced underlying operating income is expected to come in “flat to modestly declining” for the full year.
Online shopping to set to rise
Nielsen has been monitoring how the situation will affect e-commerce.
“While it’s too soon to detect any meaningful shifts in online purchasing, we do expect online shopping to rise as people become increasingly interested in reducing their exposure to others, as the virus appears to be spread via coughs and sneezes,” the global information and measurement company said.
E-commerce may also be a factor beyond consumer purchasing. In China, for example small- and medium-size retailers are using e-commerce to keep their stores stocked, which wasn’t an option during the SARS (Severe Acute Respiratory Syndrome) outbreak 17 years ago.
“Because shopping behavior is so much different than during the SARS outbreak, and because the government started to control the issue sooner, we think the retail impact cycle will be shorter,” said Ryan Zhou, Vice President, Consumer Packaged Goods, Nielsen China. “Store sourcing is also much different today, and online suppliers have reacted very, very quickly by offering store owners, for example, mobile applications for sourcing orders. So online has really helped suppliers react and adjust their supply systems in ways that didn’t exist during SARS.”
The impact for FMCG manufacturers and retailers is ongoing and Nielsen will be providing regular updates.
